Most spouses never anticipate that another person could be made a party to a divorce proceeding. In other words, most spouses assume that the only parties to a divorce proceeding are the husband and wife. This is not necessarily true.
In many divorces, a claim is filed for equitable distribution asking the court to divide marital assets and debts. A marital asset could be titled in the name of someone other than husband or wife. For example, say a young couple does not have a sufficient credit history to purchase a home. Wife’s parents agree to take title to the home and apply for the mortgage. Husband and wife use their money for the down payment. Wife’s parents and husband and wife verbally agree that husband and wife will use the home, will reimburse wife’s parents for the mortgage payments, and when the mortgage is paid in full, wife’s parents will deed the property to husband and wife. If, later, husband and wife separate and husband moves out of the home, he wants to receive his portion of the equity in the home, even though it is titled in the name of wife’s parents. If a lawsuit is filed for equitable distribution, it will be necessary for husband to join wife’s parents in this lawsuit. He would allege that, although wife’s parents hold title to the home, they are actually holding title for the benefit of husband and wife and it would be unfair and inequitable for them to retain title without compensating him for his portion of the equity. Without getting into the specifics of his claim, he would be asking the court to impose on the property what is known as a “resulting trust” that would allow him to be compensated.
Under these facts, the court has no authority to order that husband be compensated unless wife’s parents are made parties to the divorce proceedings. In other words, wife’s parents would also have to be sued in the divorce proceeding.
There are many other circumstances that would require that third parties (sometimes including corporations) be made parties to divorce proceedings to allow the court to equitably divide marital property.
As with any other issues arising from your separation or divorce, you should consult with a North Carolina Family Law Specialist. Feel free to contact me, Monty Beck, Western North Carolina Family Law Specialist to discuss your separation or divorce.